ibusinesslines.com September 20, 2018

Online tax change complex for NY

29 June 2018, 01:32 | Jodi Jackson

Supreme Court of the United States Credit SCOTUS

Supreme Court of the United States

"Without a doubt, state governments will begin to assert the right to require sales tax collection by out-of-state sellers (both nonprofit and for-profit) who ship goods into their states".

"One of the reasons why the Supreme Court liked the thresholds in the South Dakota statute is because they're preventing (the state) from capturing a lot of smaller businesses", said Nancy Manzano, director of the chief tax office at Vertex Inc., a provider of tax software solutions for businesses.

He said this ruling from the Supreme Court should not affect their customers much, if any. South Dakota on Thursday, and held that "physical presence" is not necessary before states can validly apply their taxing powers to businesses that have neither persons nor property in a state but nevertheless conduct substantial business in that state. For e-commerce companies and interest groups still fighting sales tax collection laws that means the fight will carry on state by state.

That's the retailer's problem, not yours unless you're an affected online retailer, or work for one or if you purchase that retailer's goods due to their low prices. These new laws will undoubtedly increase the time, money and effort that remote sellers must devote to state and local tax compliance, including registering as a vendor to collect sales and use tax in multiple states. They have been able to do this on pricing by avoiding sales tax and having lower operational costs by not having a network of brick-and-mortar showrooms or a massive warehouse to support on demand inventory. "In order to get to $100,000 in receipts in a state like South Dakota, you have to be a big retailer".

Boudreau is OK with a nationwide collection of sales taxes for online sales. Because of Wayfair, state government officials could close an estimated gap of $169 million to $279 million in tax revenue that had been lost to sales by companies operating over the internet. It's a mixed bag for merchants, depending on each merchant's business model and how state and local tax laws are modified.

The court upheld a 2016 South Dakota law that requires online merchants with more than $100,000 in annual sales or 200 transactions with state residents to collect sales tax. Customers in growing numbers have embraced the convenience and effectively "tax-free" benefits of online shopping, even if they sometimes had to pay for shipping. Justice Anthony M. Kennedy said the Quill decision could be causing states to lose tax revenue of up to $33 billion annually.

"This simplifies life for retailers and for consumers and it levels the playing field for retailers and their internet competitors", Karr said.

The burden will fall disproportionately on small businesses. Oklahoma now has the green light to require any business, anywhere in the United States, that sells a product to an Oklahoma customer to collect all local and state taxes.

Besides, other small businesses have been operating at a disadvantage since 1992.

The tax compliance software and services are created to work with the programs retailers use to process their sales transactions.

"But the administrative costs of compliance, especially in the modern economy with its internet technology, are largely unrelated to whether a company happens to have a physical presence in a state".

The Quill ruling applied to a case involving mail-order businesses and reflected a long-ago economy.

First, the Supreme Court recognized that there may be additional Commerce Clause considerations and directed that these concerns be addressed upon remand.

The Trump administration backed South Dakota in the case, urging that Quill be overturned or at least limited to catalog sales.

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